This is my last post on SeytLines as the times for me are changing. Almost four years ago to the day, I decided to move my career in a new direction. In the past, we described that change as retiring. But, Baby Boomers don’t retire we move on to the next gig. It is time for another change and a step in a new direction, so I am also leaving my post as Lean Law Evangelist for Seyfarth.

For the curious few as to what comes next …

I have been an adjunct professor at Michigan State University’s College of Law for two years and I will prepare for my third year this summer. The three courses I teach—Delivering Legal Services, Entrepreneurial Lawyering, and Artificial Intelligence and Law—are part of the Law College’s LegalRnD program. I find teaching a challenging and rewarding task and I hope to continue doing it for years to come.

I am involved in various research projects focused on the practical aspects of changing the legal profession. They range from new models for law firm-client relationships to bringing natural language processing and machine learning to court decisions. It isn’t just the delivery of legal services that is changing, it is the substance of law.

I talk every week with startups in the United States and around the world. I will continue those conversations. These entrepreneurs are the disruptors and they bring amazing stories to our industry.

I also have been writing “the book.” As I present, talk, blog, and teach how to re-invent legal practices in the modern world, I am asked “what can I read?” My answer so far has been a cobbled together list of online articles, posts, and books dealing with occupations other than law. I decided to change the answer by writing the book. I’m deep into it now and will continue the push to get it into print.

Finally, I will continue my quest to move the profession forward. That journey has taken me through small, medium, and large law firms; large corporations; consulting; and academia. I look forward to learning the next step in that journey.

A Different Source for the Same Voice

As you might suspect, although I will speak through a different publication, I will continue to talk about the profession and its future.

I thought it would be fitting to close out my last post on SeytLines with a verse by Bob Dylan that helped define another time of change. Thanks to all, and I look forward to continuing our discussions on the other side.

You practice law for a few years and decide mom was right. You should have gone to medical school. You take the test, apply, and find yourself sitting in a classroom on the first day of classes at a prestigious medical school.

The professor strides to the front of the classroom and announces, “Today, we will start learning surgery. Our first lesson will be on how to remove an appendix. We will focus on the attachment site and how to cut and suture that area.”

Your confidence drains on to the floor. You must have missed some steps. How could your first class be on surgery and start deep into a surgical process?

Your raise your hand and ask, “Um, professor, shouldn’t we start a bit earlier in the process? I mean, shouldn’t we cover the location of the appendix in the body, how surgical rooms work, the place to make an incision, and other stuff like that?”

The professor gives you a quizzical look. “This is a medical school. We skip over that type of stuff and go right to something in the middle. We assume you will learn those other things some other place.”

Puzzled, you ask “But, aren’t those, like, essential to making the operation work? Without that other stuff, won’t the operation fail and the patient die?”

The professor is exasperated. Lawyers who become medical school students ask irrelevant questions. “If we wanted every operation to succeed we would send our students to the business school so they could learn operation management. This is a medical school.We focus on the part that interests us: cutting the appendix out and suturing the attachment site.”

Lean Thinking Training—A Checkered History

I am sure you have guessed the topic of this essay. It is how we teach … lawyers in law firms and law departments to use lean thinking. Yes, that’s right. Lawyers have taken the path never chosen to educate those in our profession. But, I digress, so let me go back to the beginning.

From the end of WW II through the mid-1980s, Toyota Motor Company built a car company that excelled. It had other specific goals, but the result was, as James P. Womack titled his first book, “The Machine that Changed the World.” Toyota pulled ideas from many areas and dating back to the 1800s, melded those ideas with some new ones, leading to the Toyota Production System (TPS). Womack and others brought TPS to the United States and re-branded it “lean” thinking to widen its appeal. Companies in every industry adopted it and today it is the most widely used philosophy and group of methodologies for improving business operations. Old story.

As we know, the legal industry was the last to join the lean thinking party. But clients will be clients. With the 21st century came their desire to stop throwing endless piles of money at law firms. A strange notion, perhaps, but what are you going to do?

Lean thinking has worked in all industries and geographies, so if lawyers must pay some attention to improving efficiency, it qualifies as the ideal place to start. How hard can it be? Clients do it so the elite lawyering class can learn it in an hour webinar over lunch. The effort to train practicing lawyers the art, science, and theory of lean lawyering began.

Ignoring oddballs like me who have done lean lawyering for over two decades, the broader effort started in 2005. One could say, if one was generous, that the “industry” has worked on learning lean for a dozen years. The reality is that isolated clients and firms have done some work to learn lean. The majority of the profession has thrown a massive wall of resistance at any form of change. Despite all the talk of change throughout the profession, data tells no tales. Pick any improvement metric and a small percentage of the profession has made the change—fee arrangements, project management, process improvement, metrics themselves, new technology (versus updating Word), design thinking, and so on. Outside law, these have become common ideas. Within law,lawyers have barely taken the wrapper off the box. But, I digress.

Back to educating lawyers on lean thinking. It is incumbent on those who believe to teach those who don’t know. So it was in the mid-1970s. Toyota decided it was time to spread the word of the Toyota Production System. The first evangelists to teach TPS were engineers and consultants who had worked with Toyota. They had the knowledge and experience needed, but they had to market the idea. Lean thinking was and is counterintuitive in many ways, so one had to be an evangelist.

One consultant started selling TPS to companies in Japan. He put on a two-day workshop giving participants a taste of process improvement. It was enough to show participants the power of lean. That plus Toyota’s reputation convinced companies to try the new way. As the consultant succeeded, he turned his sites to the United States.

He tried his two-day workshop in the United States, but ran into problems. He decided the root cause of his problems was time—two days was insufficient. He expanded his marketing workshops to one week. His one-week kaizen event marketing tool became the way to implement lean thinking.

Toyota did not do one-week kaizen events. Toyota did “continuous improvement.” TPS and its Western cousin lean thinking lack a goal that says “improve over a week and walk away until you are ready to come back (if ever).” Toyota’s goal is continuously improve processes in a cycle, as putting money in the bank starts a cycle of compound interest (at least back when banks paid interest on deposits). As a fundamental component of lean thinking, the one-week kaizen event sucks. But as a marketing ploy, it was a ball hit out of the park.

Marketing successes can take on lives of their own and that happened with the kaizen event. Companies decided to go through lean transformations and kaizen events became the way to drive the transformation. Rather than find ways to build the basics of lean thinking into the business, companies started with kaizen events. Small teams gather in conference rooms, plot the activities for the week, go to gemba, find ways to improve, implement, measure, create new standard work charts, report out, and celebrate. In one week, at team could get 50%, 75%, or greater improvement. We got this lean thinking thing! But, I digress.

Toyota built the Toyota Production System over decades, layer by layer, as it gathered, revised, and created elements of the System. Within Toyota manufacturing (curious footnote, TPS has not spread throughout Toyota itself), the System became part of Toyota’s DNA. The lean thinking adopted by other companies was, in most instances, a bolt-on. Employees would run a kaizen event, improve supply purchasing for the marketing department by 50%, party on Friday night and go back to their working lives on Monday. Some might do another event on supplies in six months or a year. The same practice held true throughout the company. The company failed to make the transition from kaizen marketing events to continuous improvement. A few years passed and the company looked for something else to do. Many of those companies no longer exist. All of them left a lot of value on the floor.

If you wander through companies across the United States, you can see remnants of lean thinking efforts in front offices, back offices, and on factory floors. Those companies continue the systems established in kaizen events, because they improved the business. But, the improvements stopped or slowed to a crawl. The businesses failed to complete the jump to continuous improvement.

As in any partial success story, the reasons these companies failed are many. Technology is one reason. Lean thinking overlapped in the United States with the introduction of personal computers and all that has followed. It is easier (not necessarily better, not cheaper) to buy a computer than to fix processes. In some cases,computers do better than humans. So companies bought computers. In other cases, process improvement would have eliminated waste negating the need for human or computer to do a process. Computers without process improvement introduced a downside. Processes have become incredibly complicated and it is tough to sort them out without process thinking. I’m sure artificial intelligence will solve that problem.

There are other reasons. It requires discipline to stick with a process improvement program. Trying to get employees to work as a team and follow standard work procedures can make coaching a synchronized cat swim team look easy. Organization leaders come and go and the turnover brings changes. Competitive pressures intrude, and for public companies the pressure of the quarter can overwhelm “long-term” (that is, one year) thinking.

Why Re-Training Is Imperative

So this is the crux of the matter in the legal industry. First, learning to understand and improve the world through process thinking is an imperative. From clients, to automation, to artificial intelligence, to everything else, you must understand processes to improve.

Second, starting any process training in the middle with a kaizen marketing event is not the way to learn. One-day, two-day, one-week training events don’t cut it. I’ve taught my fair share, I’ve participated in some, I’ve witnessed a lot. If, as a profession, we want to have a real future instead of a stub existence, we need to change the paradigm that lawyers leave law schools fully-formed. Practicing law is a lifelong learning experience and we need to expand our horizons. Marketing is fine, but for learning we need to do a lot more.

Let me expand on the second point. No one can teach you lean thinking or any of its cousins in a one-hour lunch meeting; half-day, full-day, one-week event; blog post; or a webinar. Remember your reaction the last time a client said, “Stop complaining about what we do with the contracts. Come give us a one-hour lecture on contract law and everything will be fine.” Exasperated you thought, “Good grief, this person wants me to teach them in one hour what it took me three years in law school and 20 years of practicing to learn. How ridiculous.”

Third, waiting for the AI revolution orautomation won’t save you. Those computers work through processes—coding is tough because it demands disciplined ways of thinking and doing things. To have even a glimmer of what the computer does and integrate it with what you do, you need process understanding.

What To Do

We need to move to investing in the future of the legal industry. I don’t mean investing as in spending a lot of money. I mean investing in the true sense: putting our minds and bodies into driving the future of the legal profession. In law schools, but as important in law departments, law firms, legal aid organizations, courts, and all manner of legal service provider offices, we need to re-learn how to practice law. We need to get curious, study, practice skills, practice them again, and collaborate on new ways to solve client problems.

This may sound like I am advocating for re-training the entire profession. I am. If I expect my doctor to use modern techniques to practice medicine and not treat me as he would have done in 1890, why should I expect less from my lawyer?

Bringing this back to lean thinking, we need to start that lean training at the beginning. What is the philosophy of lean (don’t say cost cutting)? What do we hope to achieve through this philosophy? How does the philosophy translate to actions? What are those actions and how do we build them, layer upon layer, into ways of delivering legal services that meet what clients and society need?

What I am about to say is harsh, but true. In the past dozen years, the legal industry has progressed in lean thinking the same amount that an average corporation would progress in a month. I spent my formative years learning lean as general manager of a plant with 700 employees. Most had stopped at a high school education. Many had not finished high school. Some read at an elementary school level.

They all went through lean thinking orientation and all could work on lean improvement teams—most did. Within six years of my starting at the plant (a few years after I left), the plant won the most prestigious prize in the lean community, The Shingo Prize.

One of the Jeopardy contestants who lost to IBM’s Watson said, “I for one welcome our new computer overlords.” But here’s the thing. Upon seeing the chaotic world of law, those overlords may not welcome lawyers. The rule of law faces immense challenges today. Lawyers have the knowledge to protect the rule of law and make it available to all. But, if we fail to transform from 19th century practitioners into 21st century problem solvers, the impact will extend outside the borders of the legal industry.

By Steven Fettig. Taken at Meijer Gardens and Sculpture Park, Grand Rapids, Michigan.

In 2002, reporters asked Secretary of Defense Donal Rumsfeld a question at a U.S. Department of Defense news briefing. In answering, he set up a taxonomy that has become popular to catalogue our state of knowledge. In the Rumsfeld Taxonomy, there are things we know, things we don’t know, and things we don’t know we don’t know. In the Secretary’s words, “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns.” The last category, as Secretary Rumsfeld noted, is the most intriguing.

Scientists Discover Tacit Knowledge

Michael Polyani was a Hungarian physical chemist. He studied in Budapest and Karlsruhe, Germany, but WW I interrupted his studies. He served as a medical officer during the war and, during a sick-leave, managed to write his PhD thesis (encouraged by Albert Einstein). He received his PhD from the University of Budapest after the war.

After teaching for years in Hungary, he emigrated to Germany and then found his way to the University of Manchester. With the turmoil in Europe, his interests had shifted from chemistry to economics. The University accommodated the shift by creating a chair for him in Social Science which he held until he retired from his distinguished career in 1958.

Years before he retired, Polanyi gave the Gifford Lectures at the University of Aberdeen. He published a revised version of his Lectures in 1958 as the book, Personal Knowledge. In the Lectures and book, Polanyi argues that all knowledge relies on personal judgments. That is, he argued, one cannot reduce knowledge to a set of rules. Polanyi’s views countered those of his friend Alan Turing and were the basis for some early critiques of work in artificial intelligence.

Polanyi extended this idea of personal judgments to a concept he called “tacit knowledge.” According to Polanyi, we experience the world both through sensory data and through other knowledge—tacit knowledge. Tacit knowledge includes things we aren’t aware we know, but which play an essential role in our lives and work.

Polanyi’s ideas have been the subject of much research. That research helped explain a problem that has bedeviled scientists for many years. As any high school student who has taken a science class knows, one of the bedrocks of science is the idea of the repeatable experiment. Scientist A conducts an experiment which yields results that meet a basic significance test. She publishes her results in a journal. Scientist B wants to extend Scientist A’s work. To get started, Scientist B tries to replicate Scientist A’s results. B runs the experiment as described in the Journal article, but gets results different from A. Were A’s results a fluke? Were B’s results a fluke? After many attempts, B and scientists C, D, and E are unable to repeat A’s results. Now what?

At first you might think such an outcome uncommon. Scientists publish in peer-reviewed journals. We assume that by the time an article makes it into print, the results it reports aren’t a fluke. Scientist A may have repeated her experiment several times before publishing to make sure her first results were not a fluke. The peer reviewers would catch any flaws in what she did. The data is public. So, absent fraud, we think A’s results are reliable. In fact, scientists still struggle with unrepeatable results. Why can’t anyone repeat them?

This is where Polanyi’s theory comes into play. Under the tacit knowledge theory, the steps in the journal article are not sufficient for other scientists to replicate the experiment. The missing element is tacit knowledge. In the case of A’s research, she has some tacit knowledge necessary to make the experiment work. Tacit knowledge goes beyond failure to create detailed instructions. It includes knowledge the person can’t articulate.

Science and the Unknown Unknowns

It is the time of the Cold War. Russian researchers led by Vladimir Braginsky at Moscow State University are working on ways to detect and measure gravitational waves. Measuring these waves is a big deal—you may recall seeing articles in 2016 describing how scientists had, for the first time, detected gravitational waves. Albert Einstein had predicted such waves 100 years ago.

The Russian researchers’ instruments used sapphire mirrors. Every little thing mattered in the search for gravitational waves, including the quality (“Q”) of the sapphire used in the mirrors.[1] The Russian researchers claimed to have measured a new, high quality level for their mirrors, something of great interest to those searching for gravitational waves. But, despite their best efforts, researchers at major universities including Caltech, Stanford, Perth, and Glasgow could not match the Russian’s results.

Since it was the Cold War, many were skeptical that the Russians had achieved what they said. As the years passed and no one could repeat the results, the skepticism grew. By 1998, the Cold War was over. Scientists from Glasgow University visited Moscow State University to learn how the Russians had managed to measure the impressively high Q.

After a week, the Glasgow scientists trusted the Russian scientists. With distrust out of the way, the Glasgow scientists focused on what the Russians were doing. It turned out, there was a lot to know beyond what the Journal article said.

Remember, the equipment is very sensitive. Construction and technique play critical roles in the measurement process. This was where the Russians had tacit knowledge. The Glasgow scientists learned how to suspend the sapphire, what to use (a certain silk thread from China worked best), the best length for the suspension thread, the most efficient way to create a vacuum for the test, and many other factors. They also learned patience. The Russian scientist doing the experiments would re-run the same experiment over many days making minute adjustments, before he would accept the results.

Some changes had explanations. But for many, the answer was akin to the famous dictum from Supreme Court Justice Potter Stewart when writing about pornography, “I know it when I see it.”[2] The Russian scientist could not articulate what he need to do, he just knew when he had to adjust the apparatus or run the experiment another time.

AI, Law, and The Tacit Knowledge Risk

As we see the earliest incremental steps of artificial intelligence creeping into law, we should ask whether tacit knowledge plays a role in the legal universe. It is easy to be dismissive and argue no (though I suspect lawyers will try to answer yes). Law is not an “exact” science like physics. The steps that physicists outside of Russia missed when trying to replicate the Q experiments were in many cases matters of omission. Had the Russians given long and detailed explanations of everything they did, the other scientists may have replicated the experiment.

If we push a bit further, the “yes” answer gains currency. Harry Collins has written extensively on tacit knowledge. In Tacit and Explicit Knowledge, the third book of his non-fiction trilogy studying knowledge “top to bottom,” he developed a “Three Phase Model” for tacit knowledge: relational, somatic, and collective. Relational addresses the “contingencies of social life,” somatic the “nature of the human body and brain,” and collective “the nature of human society.” Without delving into the Model, we can see that tacit knowledge includes more than what our senses tell us, it includes much going on around us.

In law, we moved from formalism to realism in the beginning of the 20th century (pragmatism never caught on). What lawyers and judges did involved something beyond formalism. Looking at the facts, reading cases and statutes, and applying the latter to the former was necessary, but not sufficient. The process needed an additional something, and it came from experience, both life and current. Reading the cases or statutes applicable to a set of facts did not give you all you needed to “apply the law.”

The tacit knowledge concept puts a name to what many lawyers try to articulate when they say we need lawyers. Sending a computer to law school, where it learns the theory and rules of law, is not sufficient to give us a practicing lawyer. Even having the computer read all the decisions of all the courts, study the hornbooks, and peruse law review articles falls short. The computer may learn what is in print, but it will not learn the “unknown, unknowns.” It will not learn what the lawyer or judge omitted from the papers. As important, it won’t know what it doesn’t know.

Tacit knowledge plays a role in shaping the biases and heuristics that Daniel Kahneman brought to our attention in behavioral economics. A judge deciding a case employs those biases and heuristics as she applies law to facts. To claim otherwise attempts to argue that judges are not human. But where does this knowledge take us?

Consider tacit knowledge along with artificial intelligence. AI uses machine learning. Imagine we gave AI software all of the cases ever decided involving securities law. We gave the same computer all the law review articles written, all the books published, and any other written thing we could find. The AI used machine learning to scour the materials for patterns. It found things we knew and some “patterns” we didn’t know. But are the new patterns correct? And, what about everything that wasn’t written down?

AI software stumbles when it comes to certain challenges. Law can magnify those challenges. Writing quality varies widely among judges. On a good day, judges may omit essential information from their opinions. On a bad day, they also omit logic. AI will have difficulty inferring what is missing. If 1,000 cases lack the same information, AI may find the pattern. But if only one case lacks the information, AI can’t find a pattern. Another challenge involves deciding what weight to assign each fact. The judge may list 10 facts, but not the importance of each fact to the outcome. Facts change by case, so finding a pattern is difficult.

Think of a decision involving a criminal sentence. Case law requires that Judges list the factors that played a role in sentencing. Most do, but some omit some or all of the factors they considered. The software may see a factor in the case and incorrectly think the judge considered it. The judge may have used her experience to weight recidivism risk factors when deciding what support services the defendant would get, but not listed her experience. Tacit knowledge plays a role in judicial decisions.

When we introduce AI into law, we need to ask what happens to tacit knowledge. If we think of AI as just doing a better job finding things, then we can argue it has little to no impact. AI finds cases faster than a person, but the person still reads and interprets the cases. But how does the AI know which cases to select versus the human? Would a person have selected a case, even though ambiguous, because it gave hints about new directions to pursue?

I am not pretending to answer the tacit knowledge question in this article. But I think we must ask the question as we expand our use of proto-AI and AI technologies. The question may not be what we found, but what we missed.

[1] The quality or Q factor for a material measures the rate at which its resonances decay. Think of a bell. You ring the bell and it takes time for the ringing to subside. The longer it takes, the higher the Q. The scientists wanted “high Q” sapphire and the Russians had measured a Q of 4 x 10 to the 8th.

Last week we had two events that drew interest. The first, of course, was the NFL draft. Hundreds of players competed for a career that lasts on average 2.66 years (down from 4.99 years in 2008). The total number of NFL players hovers around 1,700. Around 25% of the players end each year injured or unable to play for another reason. For some who make the cut, the prize is an NFL career no matter how short. For others, it is the money.

The second, of course, was the annual release of The American Lawyer’s list of the 100 largest U.S.-based law firms, based on revenue. The average career of a lawyer is 10 times than that of the average NFL player. Many individual law firms have more than 1,700 lawyers and it is rare for a law firm to place a lawyer on the firm’s injured or unable to practice list. For some lawyers who make the cut into Big Law, the prize is the chance to make equity partner at a firm and, at the largest, receive annual pay in the millions. For others, the prize is the chance to pay off some college and law school loans.

The departure rates from the NFL and Big Law are high. The number who make it to the top earning echelon is small (the percent of equity partners compared to number of lawyers in the firms is now down to about 20%). Neither football nor law presents a high probability of making it to wealth and fame.

Many sports fans live for the draft and many lawyers live for the AmLaw 100. Neither event means much in the modern world. Many first round NFL picks flame out. Some law firms will disappear in a few years. What you do is more important than where you land on a list.

I find the AmLaw 100 list interesting because it reinforces my belief that the legal industry’s maturity level is around 100 years behind the rest of the world. Lawyers take pleasure in watching themselves and their industry live through events that for others happened long ago. We are living through an instance of Edmund Burke’s saying, “Those who don’t know history are destined to repeat it.” For those fond of movies, we are at the point where everything goes into slow motion. You see people, cars, buildings, and debris float gently through the air. You know there is a crash, but in slow motion it seems more like a complex ballet than a tragic and unnecessary event.

The Legal Industry Goes Where Others Have Gone Before

Looking at the arc of other industries will help us see the possible arc of the legal industry. Cast your mind back to the beginning of the 20th century.We will start with the retail industry. Richard Warren Sears and Alvah Curtis Roebuck founded Sears, Roebuck & Company in 1886. It started as a watch company, issued its first catalog in 1888, and they gave it the name we know in 1893.

Kmart, joined with Sears, traces its roots to 1897, though most consider 1899 as the official start date. S.S. Kresge founded the company with his friend John McCrory. They operated stores under the S.S. Kresge banner until the 1960s, when the company opened the first Kmart store (beating Walmart by four months).

James Cash “J.C.” Penney opened his first store in 1902. By 1913, that store had grown into a small chain and the company took on the JCPenney name. At one time JCPenney was the yin to Sear’s yang. A large shopping mall thrived with Sears as the anchor tenant at one end and JCPenney at the other.

The late 19th century and start of the 20th century saw a retail landscape dominated by small, mom-and-pop dry goods stores and early groceries. The large retail stores that dominated the landscape by the 1950s and 1960s were just getting started.

Today, most of the large retail chains have died and the remaining few struggle. Some predict 2017 will pass all prior records for number of retail stores closing through bankruptcy. Many point to the rise of ecommerce as the new force killing off the old model. The remaking of the U.S. retail scene has many causes. But, the pattern of moving from a craft structure through consolidation to a few survivors is not unique to that industry.

Steel, aluminum, banking, and insurance, are some of the many industries that have followed a similar pattern. The automotive industry is another. At the turn of the 20th century, automobile making was still a cottage industry. There are high-end specialty care makers today, but for the rest of us there are a few companies that dominate the showrooms. If you want a service industry that went through the pattern, look at public accounting. If you want another service industry struggling to survive, look at journalism. According to Clayton Christenson, consulting is now following the arc of the legal industry.

A Peak At The Legal Industry’s Future

Let’s look at the arc of the legal industry during the prior 40 or 50 years. Once there was a large middle class of law firms. Now we see a few regional firms. The majority of those firms that sat in the middle either merged upstream or broke apart. The upstream mergers, marked by larger firms joining into much larger firms, continue the consolidation trend. The cottage industry of law is evolving into a proto-retail or automobile industry.

If we look at the current legal industry structure we see a faint image of the future. In articles, you read about industry “stratification.” In size, we have the verein firms. These are behemoths by historical legal industry standards. Compared to service entities outside the industry, they are small. The largest public accounting firms and consulting firms dwarf the largest law firm. The trend, however, is unmistakable. Some firms are positioning themselves to be the “Big 4” of the legal industry.

Below that size we have consolidation in the second tier. This tier runs deep and it will take years, perhaps decades, to sort through who will have staying power. Firms in the second tier will face greater challenges as the practice of law evolves. They must either find a niche or face extinction. Differentiation will be key to survival.

The emerging picture also shows us that we should distinguish between size and profits. Historically, we have linked size to profits. Equity partners at the largest firms made the most money. As the industry has evolved, the link has cracked. The largest firms are not the most profitable. That isn’t the same as saying partners in those firms struggle. But we know that being the biggest jewelry chain is not the same as being Harry Winston jewelers. As most service businesses have found, at some point you must choose. You can be the largest or you can be the most profitable, but being both seldom works.

In the background of our picture, there is a hazy structure. The vague outline is there, but we can’t quite make it out. It is the possibility of allowing those who are not licensed to practice law to own law firms. If or when this happens, the picture will change. In theory, law firms will emerge that can compete in size with other professional services firms.

As in the other industries, we will see many models for legal services providers as the industry evolves. That transformation is underway. The most remarkable element of the transformation is that lawyers held it off for so long.

The Legal Industry’s Adolescence

The wild card—the thing that could change the picture overnight (remember, the iPhone is barely 10 years old)—is technology. Retail, automobile, and other industries went through consolidation and transformation during immature technology periods. The legal industry is going through its adolescence in the midst of a great, technological upheaval. Amazon emerged from technology to disrupt the retail industry and Tesla emerged to disrupt the automobile industry. But, both industries had gone through adolescence long before the disruptors appeared. Not so for law.

Negotiating adolescence is tricky and will be so for the legal industry. Amidst the confusion about artificial intelligence, automation, and blockchains, we have new ideas such as self-completing contracts. We have to tease out what lawyers do from the routine task of getting it done.

Part of getting through he experience is having an idea what we want life to be like afterwards. What do we see as the roles of lawyers in society? What will those lawyers contribute that adds value? Adolescents go through a phase where they search for their role in the world. Lawyers have not faced that challenge before, but we face it now. Answering could be as tough as making it in the NFL. I look forward to seeing how we do.

Friday mornings reminded him of clearing the gutters after a major windstorm. It was hard work with few psychic benefits. Judge A.M. Smith (A.M. To his friends, Atticus Marshall to his mother) was a U.S. federal appellate court judge. He sat on the U.S. Court of Appeals for the 15th Circuit. At the moment, he was in a conference room huddling with a law clerk and a coding clerk. They slogged through the cases decided that week. Even a triple macchiato soy vanilla (two shots) grande lacked the punch to carry him through the session. He reminded himself that he had life tenure. In a gig world with jobs lasting six weeks on average, that was a good thing.

It wasn’t the discussion of cases that bothered him. It was the back and forth to get them into publishable form. He could say whatever he wanted in his written opinion. But only one thing mattered: the coded opinion.

Law Becomes Code

Congress had passed the Interoperable Opinion Codability and Usability Structure law in 2025. Progressives and conservatives hailed IOCUS as the greatest innovation in the judicial system since trial by jury. U.S. Chief Technology Officer, 21-year old Mark Sergey Gates (known to his friends as MSG) championed the law. MSG had PhDs from MIT and CalTech. In his free time, he dual-coded. He had two monitors positioned side-by-side each running of its own laptop. He would code one program using the left monitor and a second using the right monitor. He said it was like playing two chess games at the same time. “IOCUS,” he said, “would finally make law transparent.”

IOCUS grew out of immense public frustration with the federal judicial system. Each year, the courts fell further behind on deciding cases. The written opinions judges produced were undecipherable, even to most lawyers. Concern kept rising that law had moved from the government to corporations. Corporations established their own laws and legal systems in website terms and conditions. No one challenged those laws and systems, because the court system was too costly, slow, and ineffective to help them.For many, the rule of law was the rule of corporation. IOCUS was the fix.

Under IOCUS, human judges decided cases. But, IOCUS stepped in and mandated that judges write all decisions in text and in computer executable code. Opposition to the bill among judges was a hair shy of unanimous.

IOCUS authorized the hiring of one coder for each federal judge. The limitation was intentional—Congress wanted to keep the focus on simple coding. Adding coders would encourage complexity.

Congress had listened to the judiciary. The phase-in period stretched over five years. Judges had to produce coded opinions in diversity jurisdiction cases with simpler, state court issues first. Other legal issues trickled in over time, with constitutional law cases at the end. Courts were to code cases with many issues according to the “last needing coding” rule. A judge would code a case with contract and constitutional issues as if the entire case depended on constitutional law. Lawyers joked that judges would find constitutional law issues in every case. IOCUS left the remaining details of implementing the law to others.

The Federal Center for Judicial Innovation (FCJI) filled in some details. The rest had evolved over the 10 years since IOCUS became law.

Judge Smith’s chambers handled case decisions the same way as other federal judges. Smith and his law clerk would read the briefs, listen to oral argument, meet with the other panel judges, and do the other things a typical appellate court judge always had done. The three judges on the panel would make their decisions. The senior panel judge in the majority would assign the task of writing the decision.

Judges could write whatever they wanted to say. They could publish one written opinion or any combination of opinions expressing their views. But, it was the job of the senior judge in the majority to produce the code opinion. The code opinion was the only thing that mattered. If a written opinion conflicted with the code opinion, the code opinion prevailed.

A New Way of Writing

A code opinion was the majority opinion, annotated so a computer could read it. That was part of IOCUS’ beauty. The law created incentives for judges to write clear, simple opinions. Coding clerks would tag unnecessary verbiage as dicta. They would push back on ambiguous tests until they got something the computer could execute. Long, windy diatribes became short, concise statements of the law.

The coding process was simple. The coding clerk used a program to review and take a first pass at tagging the opinion. The clerk would review the first-pass coding and adjust the tags as needed. The FCJI had standardized the tags. The sticking point for the court was choosing what was necessary for a holding and what was supplementary, but unnecessary, material. Judge Smith battled that devil as part of the Friday morning sessions.

The court published the final written and coded opinions in a public repository using blockchain technology. Using a blockchain ensured that no one could alter the court’s official opinions. The blockchain was a distributed ledger. Within minutes of publication, everyone who subscribed to the chain had access to both versions of the opinion. Tampering with an opinion required changing the opinion block on all versions of the ledger at the same time, something that had never happened.

Any complex system may have errors. A coding clerk could make a mistake. To deal with this problem, the FCJI required that courts publish decisions to repositories on LawGitHub. Any person could log on and suggest a change to a published decision. The system had filters to handle spam. The coding clerks for a court (say, all coding clerks for the U.S. Court of Appeals for the Sixth Circuit) met under the supervision of the Chief Judge of the Court to consider suggestions aimed at that court’s decisions.

The coding clerks separated the suggestions into three buckets. First, they weeded out suggestions to change the decision. Second, they gathered “typo” suggestions. Third, they gathered the ambiguous suggestions. If someone wanted to change a three-part test to a four-part test, the suggestion died at the clerks. But, if someone caught a “fro” that should have been “for” or a Smith v. Johnson that should have been Smith v. John, clerks would pass it to the fix pile. Finally, the clerks had a pile of questions. Should “a, b, and c” be “a, b, or c”? Was the third sentence in the fourth paragraph missing “not”?

The clerks would work out which changes to make, and the court’s Chief Judge would accept or reject them. If accepted, the changes were sent as updates to the master opinion blockchain. The update process ensured that everyone knew if a court had modified its original opinion. Transparency.

Innovation Begets Innovation

Several innovations followed IOCUS. Instead of using arcane references to cases, statutes, and other legal sources, the legal industry adopted the “Digital Legal Identifier” system. The DLI system was similar to the “Digital Object Identifier” system used by scholars. Every case, statute, regulation, code, and other legal source had a unique Digital Legal Identifier or DLI assigned to it. The DLI became the permanent identifier for that legal source. DLIs could identify parts of a source, such as a sentence, paragraph, or section. Citing became easy. Instead of Smith v. Jones, 123 F.3d 456 (6th Cir. Apr. 3, 2023) lawyers used Smith v. Jones, dli: 06:04032023:xxxxxxxxx. The dli became a hyperlink by adding “https://“ before the number. The DLI system eliminated time spent on getting citations in the correct “form,” among other things.

Coded opinions meant cases could be incorporated into other documents. Drafters could include specific cases as governing authority for documents or portions of documents. They could show how a section of the document satisfied each part of a test.

Scholars had a field day analyzing opinions. Before IOCUS, tracking issues across courts was tedious. Language was inconsistent, tests ambiguous, and the law a muddled mess. After IOCUS, a simple tool could pull all relevant law across all cases and compare what each court had written. Outliers became obvious. Sloppy decision-making declined.

Rather than developing private legal systems, corporations turned back to public systems. The ambiguity of public legal systems, delays, and politicized aspects of the process caused many corporations to use mediation or arbitration. Law had become hidden behind computer firewalls and claims of “proprietary” or “trade secret.” As IOCUS led law to become transparent, courts moved faster, and politics declined, it was easier for corporations to use public law.

Finally, routine cases dropped out of the legal system. With clear decisions and executable code for law, parties saw significant risk, high cost, and few benefits in taking simple cases to court. Predictive analytics software used the coded cases as input and the facts of a new case. For a small fee, a party could get a “high confidence” level prediction of the outcome of their case in the court system. Settlement was a better option.

Back to the Present

The story you read is fiction, but is it fantasy? All the pieces necessary to make the story a reality exist. For example, scholars have a tagging system for text and have used it for decades. Scientists use the Digital Object Identifier system for research papers. Software to read and compare annotated text is available for free, as is the software to do the tagging. Blockchain technology and software to write blockchain applications is in use. Coders and many others use GitHub as a central repository.

I left out many details needed to make the story a reality. Change is one. Judicial opinions fail to meet the codability test. Many decisions look like gray goo rather than crisp, executable code. Moving the judiciary to precise writing will take some work. Note, that the system I describe does not require a court to create a hard rule where ambiguity rules. It does require the court to make the ambiguity clear.

Technology in law can mean solving problems, rather than expensive ways to replace labor with machines. They software to do what I describe in the story is free—I have all of it on my laptop. Knitting the software into an integrated system takes some effort, but I have working pieces of the system I describe. People have built the wall between using existing technology to help others and using technology as a barrier. People can bash down that wall. I’m having fun handing out sledgehammers to the next generation of lawyers.

We know Benjamin Franklin for his many sayings. Some he created, most he borrowed and improved. One we all know. Two things are certain in life: death and taxes. Everyone has a take on the third, so I will add my voice to the fun: artificial intelligence in law is over-hyped. If the hyping AI is the most popular thing in legal industry writing , explaining how AI in law is over-hyped is the second most popular.

Collect all the AI in law articles, combine them into one big summary, and this is what you get. AI can do everything lawyers can do, but better. The future is on the horizon and the horizon is close. Retire folks. AI will do the research, write the brief, file the brief, read the brief, and decide the case. All in less time than it takes to say “unplug the darn thing.”

Law has company in suffering through hype. In fact, hyping tech has become such an art form that it has achieved consultant model status. Gartner (according to Gartner) is “the world’s leading information technology research and advisory company.” They put a name and a diagram on hype. They call it the “Gartner Hype Cycle” and it looks like this:

Gartner Consulting

Plotting technology X on the Hype Cycle can be fun. Lawyers have avoided the Hype Cycle, because lawyers have avoided technology. But, we have joined the fray. AI is our achilles heel.

They Hype Cycle is a rearview mirror metric. It is tough to measure a technology’s place on the Cycle, but looking back you can see the peaks and troughs. It feels like we are near the top of the first incline approaching Peak of Inflated Expectations. If so, a few years should plunge us into the Trough of Disillusionment. Tighten your seat belt, please.

Since we know the cycle it seems natural to ask a simple question: can we skip all the craziness and go to the Plateau of Productivity. That is the question Eddie Copeland asked in his essay, “Busting the hype cycle: 5 questions to ask about any new technology.” In turn, my friend Peter Carayiannis asked whether Copeland’s essay ideas might apply to AI in law. I promised Peter a nuanced maybe a bit surprising answer. Let’s start with Copeland’s thoughts.

The Copeland Five Asks

Copeland identifies at least two downsides to hyped technology in the context of government initiatives. First, the government wastes taxpayer time and money as it pursues initiatives that have little or no hope of succeeding. At the same time, it sidelines initiatives that could help. Second, the disappoint that comes from realizing the hype means the anti-technologists dig in and changes becomes harder.

Copeland offers five questions we should ask if hype tempts us:

“1. What are we actually trying to do?

2. Are we over-engineering the solution?

3. Is it significantly better than what it replaces?

4. Is there a connection with those who will pay for and those who will benefit from the technology?

5. What skills and processes need to be in place for the technology to work (and are we willing to adopt them[)?]”

But that wasn’t Peter’s question. The simple answer to his question is “yes,” answering Copeland’s questions would help many firms. The interesting question is whether hype does us any good. Copeland answer the question with a “no,” but I’m going to give a quasi counter-argument.

Over-Hype Can Help

My first argument for hype in the legal industry is “the burning platform” view. Managing partners at law firms say they understand their firms need to change, and change bigly. The last report I saw put the number at 96%. But, equity partners at those firms oppose change, with 67% saying they want things to stay they way they are. The problem: in many firms the platform is peaceful.

We know the metaphor. Nothing happens until the platform starts burning. With fire comes a flurry of activity. The danger for large law firms sounds like the frog in the pot of water metaphor (and yes, I know this metaphor is wrong). The story is that if you put a frog in a pot of boiling water it will jump out. But if you put it in cold water and raise the heat it will stay until its unfortunate death. In real life, that isn’t what happens but it gives us a vivid mental image. We could compare large law firms to the frog in the story. At most firms, things are peaceful. Partners seem content to wait.

For some, waiting means seeing if they can make it to retirement without investing in serious change. For others, retirement is in the distance but the pressures of today exceed future risks. They risk being the boiled frog. They seem content to take the chance.

Hype may help. Hype creates a sense of urgency. It makes it sound as if the lawyers face rapid change. In the case of AI and law, the hype suggests that if law firms wait, the future will be dark and stormy. That hype is the burning platform triggering some firms to do something. In fact, this is what we have seen.

For two years, we have read reports of some firms sliding into AI activities. They have licensed software or started using AI-enabled services. Great fanfare, blowing of trumpets, and “huzzahs” have accompanied their moves. These firms get it! The grand transition to AI has begun. So, even with all the downsides, hype may cause some movement. In the legal industry, movement is tough to achieve, so hype may have some value.

My second argument is that hype my spur some change below the AI level. As firms look at the products and services available, they may realize that they should stay in a pre-AI state. But, some things below the AI level — some of the questions Copeland suggests — may be worth asking. Looking at an all-electric car and you may decide you should stay in a pre-electric car state. So you move to a hybrid, however, because it will help.

As Copeland’s first question implies, ask what you are trying to do and you may find better solutions than hyped tech. AI may sound like a cool way to do something. Process improvement coupled with automation may get you to a solved problem faster and at lower cost. Process improvement and simple tools may bring higher rewards than AI can bring in a narrow area of expertise. Getting scared by AI may cause you to ask the questions you should have asked.

My third argument is tech awareness. Most lawyers are to tech savvy as Neanderthal Man is to Elon Musk. AI hype may cause some lawyers to realize that tech ignorance lacks the cachet it once had among the client elite. If an outpouring of social media venom can humble the CEO of a major company within hours. If new tech products can obsolete businesses within a decade. And, if some of the most respected scientists of our time think tech has the power to transform and extinguish our society. Perhaps it is time to check out this tech thing.

Bad Things Can Lead To Good Things

General counsel face a strange battle within corporations. The way to avoid some of the most significant legal costs a corporation may face is to engage in preventive law. To succeed with preventive law, one must appreciate the risks of failure. Corporate leaders who have avoided the costs and pain of major, existence-threatening lawsuits, may lack respect for failure. They underestimate the risk. That inhibits them from supporting spending on preventive law. Many general counsel have wished in their heads for a devastating lawsuit. Nothing like a burning platform to get the message across.

The legal industry faces a similar challenge. We may see climate change re-shaping the world. We may hear all the experts telling us that unless we act, we will lose the opportunity to act in the future. Lawyers have resisted. It was easier to throw labor at a problem than to move to tech. My vegetable garden does fine and in fact does a bit better as temperatures warm in my zone. I can let fixing the climate (or legal industry) be some other person’s problem.

Hype has many downsides, but it has some upsides. Getting those lawyers who firmly believe tech is a fad engaged in the future could be a big upside. If over-hype means a few lawyers get scared into asking the right questions, I can live with the over-hype.

Two years ago, I published an essay titled “The Qualities of Tomorrow’s Top Lawyers.” It has logged the most visits of the SeytLines posts. On this anniversary, I wanted to consider whether anything has changed and publish a freshened version of the essay. I hope you will share your comments. Do these qualities ring true two years later?

I have edited and updated the text of the original essay, but I have done so with a light touch. The essential points and my comments have remained the same. Note that familiarity with technology and artificial intelligence is absent from the mix. The omission is intentional. The article on which this essay is based made, I believe, a significant if unstated assumption. To qualify as “top” in the future, knowledge of technology will fall in a category similar to where knowledge of reading and writing falls today. You must have certain essential skills to be in the game. To get to the top of the game requires going far beyond those skills. As you read this essay, assume a baseline of technological competency. As you read along, keep asking this question, “Do we train practicing lawyers and law students to have the qualities they need to succeed?”

The Qualities of Tomorrow’s Top Lawyers

When I graduated from law school, we knew what it would take to be a “top” lawyer. First, you had toknow the law. You needed the legal-knowledge wherewithal to stand out in a competitive profession.

Second, you needed drive. To be at the top, you had to put in the hours. I remember reading about former Supreme Court Justice William O. Douglas. He worked as a junior lawyer at Cravath, Henderson & de Gersdorff (now Cravath, Swaine & Moore). For those who think that the work-life balance issue in law firms is a modern one, read about life in Cravath back in the 1920s.[1]:

The sixteen-hour workdays at Cravath were well known; [Bruce] Bromley was then putting in over three hundred hours a month of time billable to the firm’s clients. [William O.] Douglas was undaunted. While he was a Cravath associate, he even accepted a part-time job as lecturer in law at Columbia [Law School]. He taught one class each in Bankruptcy, Damages and Partnership, although he had studied only one, Partnership, while he was a law student. Douglas prepared and taught his Columbia classes at 8:00 a.m., then rushed to Cravath for a full day and night of duty, sometimes not returning to his wife—the Douglases now lived in Pelham, New York—before four in the morning. It was an inhuman work schedule by other people’s standards, but not by Douglas’s. At least, not at first. Eventually the pace and substance of the work seriously impaired his health.

Third, you needed sufficient personality to bring in work. It was the rare lawyer who, because of brilliance and area of practice, could get work without having at least passable conversations with clients.

With those three qualities, you could climb the rungs to the top. There were, of course, things that would make the climb go faster or smoother, but it was impossible to get there without those three.

Times Have Changed

Having those three qualities alone won’t get you near the top in the next decade. Knowing the law is essential. But, other qualities are replacing the capacity for hard work. That doesn’t mean lawyers can slack off in the next decade. It means that knowing how to use various resources available to the modern lawyer will influence your career more than putting in 16-hour days. Indeed, as millennials take over the work force 16-hour days spent on drudgework will become a badge of dishonor.

The third quality, what we called “personality,” is critical. During the next decade, the skills that make up personality will drive the lawyer’s work and her interaction with clients.

Top Qualities

In an article published in the World Economic Forum’s Agenda, Andreas von der Heydt, Head of Kindle Content for Amazon Germany, set out what he views as the seven top qualities for tomorrow’s leaders. It is fair to assume that top lawyers, at least those who want to be leaders, will want to share these qualities.

I have set out von der Heydt’s seven qualities and how I think they relate to the future practice of law. In them, you will see pieces of the three qualities I described.

1. Inspire

“Tomorrow’s top leaders truly think bold and big. They challenge themselves and their teams to live their dreams. They trust in their skills and capabilities, search for the big picture, and enjoy looking beyond it. They think, feel, behave, and act positively. They surround themselves with like-minded believers, positive shapers, and creative makers.”

What I see and hear from many lawyers today strikes me as the opposite of this quality. Rather than think bold and big, they think small and mundane. They don’t challenge anyone to live their dreams, they challenge everyone to stay far inside the guardrails. It is as if everyone must walk on the centerline. Lawyers must pay attention to details, but they must also think of the big picture, clients’ goals and clients’ needs. Lawyers must align themselves with their clients’ interests, and then perform those functions lawyers do best, such as help clients manage risk. If the breadth of our vision is restricted to billing another six minutes or catching another misplaced comma, we will have defined ourselves as not worthy of leadership.

2. Lead & Execute

“Tomorrow’s top leaders avoid what quite often causes today’s experienced and successful business leaders to arrive at utterly wrong conclusions, since the latter lack comprehension of how to live by two of today’s most relevant business and leadership principles. First, they are not VUCA [volatility, uncertainty, complexity, ambiguity] leaders. Second, they have not been able to grasp the concept of DyBoPe [dynamic, bold, people-focused] leadership. These are two crucial concepts for future leaders.”

Let’s start with the obvious: I’ll bet not 1 out of 100 lawyers know what VUCA or DyBoPe stand for. That lawyers, and here I’m focusing on lawyers who represent corporate clients, don’t keep up with the latest thinking in the business world reflects their focus on themselves rather than their clients. How can you be a leader if you don’t know what concerns those you want to lead? Put in the vernacular of lawyers, how can you be a trusted adviser when you know little about those you want to advise? The legal industry itself is filled with VUCA. Lawyers prefer unchanging, reticent, and document-focused leadership (UnReDo, for those who like acronyms). I am not suggesting lawyers become podium-pounding screamers, but I am suggesting they need to change their leadership style if they want to remain relevant to those they want to lead. (And, I’m certainly not endorsing the latest fad acronyms. But, if your clients know them, so should you.)

4. Explore

“Tomorrow’s top leaders have a strong passion to learn, to question, to dive deep, and to be misunderstood. Relentlessly.”

“Don’t challenge the status quo.” Many lawyers live by this mantra. Stable is good, because stable things raise less risk. Stable leads to knowing what tomorrow will bring. But, when clients are using new business models each year, changing technology to keep up, going global, and moving fast to avoid obsolescence, stable is the end. Lawyers must be inquisitive. Lawyers must know their clients better than clients know themselves. They must question and dive deep learning where those clients will be in the future, what concerns them, and what the lawyers can do to solve problems clients haven’t imagined. One thing that turned me off as a general counsel was law firm lawyers tuning out because we were discussing my company’s business and industry. It happened all the time (and no, it wasn’t because I was less than entertaining). Those lawyers got short-listed for “no more assignments.” Lawyers must want to understand all aspects of their clients to make the A Team.

5. Grow

“Tomorrow’s top leaders believe that you will [be] what you want and that there are no limits to personal growth. They are what I call ‘Realistic Optimists,’ i.e. being both optimistic and realistic. As such, they combine the two into one behavioral style that creates a unique sense of open-mindedness, attention, and focus. This high level of awareness and focus allows them to see things many of us do not notice while we’re too busy with problems and ourselves.”

Characterizing lawyers today, I would say they have an obsessive fascination with their professional problems and themselves. Or, as I hear it expressed, “what’s in it for me?” This inward focus, among many other things, is unattractive when viewed from the client perspective. As professional skeptics, lawyers exclude optimism from their vocabularies.

Look at the qualities “open-mindedness, attention, and focus.” Clients want leaders who say we can get there. Realism helps us articulate to clients how and what it will take to get there. As one of my colleagues was fond of saying, “be a warrior for the business.” Corporate clients are sophisticated and know that not every path is permissible or will lead to success. They want lawyers who don’t dwell on the impermissible, but focus on what can be done and how to achieve it. Those lawyers are the leaders clients want to follow.

6. Develop!

“Tomorrow’s top leaders enjoy developing and coaching others. They invest a lot of energy and time in building and maintaining personal relationships founded on trust. Trust is a core belief and value of these leaders which they work hard to earn and keep, e.g. by walking their talk, by communicating frequently and openly, by taking a stand (even if it’s not a popular one), by empowering others, and by following high ethical standards.”

Trust. It is something missing in the relationship today between in-house and outside counsel. Clients trust in-house lawyers because they feel their interests are aligned. In-house lawyers work hard to earn and keep that trust. They earn the trust of their business colleagues by coaching them rather than lecturing them. When lawyers work with business clients who have not had much exposure to lawyers, or when they are working in areas unfamiliar to clients, coaching goes a long way. Business clients don’t want to do the wrong thing. If a lawyer helps by coaching his clients past obstacles so they succeed, clients want to work with that lawyer more often. This is sometimes a hard, but valuable, lesson for lawyers to learn when they move from outside counsel to in-house counsel.

Clients want to work for companies and with individuals who have high ethical standards. Even so, some business people want to go past the edge. If money is on the line, competition gets intense. Pushing back against senior executives who wanted me to bless conduct that wasn’t ethical gave me difficult moments in my career. However, I found that others in the organization trusted my judgment when I spoke “truth to power.”

7. Improve & Innovate

“Tomorrow’s top leaders are data-driven, process-focused, and permanently in a disruptive mindset. First and foremost, they are paranoid about the fact that speed matters more than ever in a quickly changing world. … Secondly, they apply new business metrics. … Thirdly, they know that in hyper-competitive times, competition is not just on brand and technological innovation, but also—and foremost—on the business model.”

I love the opening line—top leaders are “data-driven, process focused.” It has become a cliché to talk about data and process. But it is true that both are mandatory for the next decade. Lawyers don’t seem to recognize that their clients have been on the process improvement and productivity road for a long time. Process has become embedded in companies to the point where it is just assumed. By being so indifferent to process improvement, lawyers are opening the door wide for other vendors to come in and snatch work away. In-house lawyers take note: you are not immune. Just like knowledge workers in other departments have been replaced by computers, you too can suffer that fate.

Lawyers’ ignorance of data also creates a weakness. It is hard to be seen as arguing from a position of strength when your position depends on “because I said so” or “in my experience.” Data drives decisions for clients and vendors who provide that data will become the authoritative voices on which clients rely.

8. Care

“Tomorrow’s top leaders want to support others, to give, to make an impact, and to do good. They care about the well-being of their employees and about broader environmental and social topics. They are aware of the fact that you have to give before you receive. They have integrated values like gratitude and appreciation into their lives and linked them with positive and people-focused thinking and acting to achieve a fulfilled life.”

Finally, we find a quality lawyers have claimed over the years. Because many of us have viewed ourselves as part of a profession, we have tried to act like professionals. We think about our communities, about the broader issues of the day, and perhaps do pro bono work. While it typically isn’t the personality type of lawyers to integrate “gratitude and appreciation” into their lives, the sense that there is something beyond the immediate business outcome still exists in some nooks and crannies of the legal industry. Assuming education and early training in the law doesn’t squeeze it out of them, up-and-coming lawyers also may share these qualities.

Not all lawyers will want to be top lawyers. And, of course, we aren’t really sure what that means anyway. For most lawyers, being a good lawyer and helping others solve their problems will suffice. We need those lawyers and, given the appalling statistics about access to civil justice in the United States, we need them now more than ever. But, as we look at what training to be a lawyer should involve now and over the next decade, understanding what our clients and communities will want to find in leaders is a worthwhile exercise. Unless times change, many lawyers will become our leaders of tomorrow.

Ever consider Elon Musk’s goal of having people travel to Mars in ten years? No? Let’s dig in to the topic for a few moments. I was a child who heard President Kennedy’s challenge to land a human on the moon. We did it and it was a big deal. My family named our new purebred Irish Setter O’Grady’s Rusty Moon because he joined our family on the day of the moon landing. Musk’s challenge, as was President Kennedy’s challenge, is audacious and exciting.

To meet his goal, Musk needs money and a collaborative team. You may think I am redundant by including “collaborative.” If so, think back on teams you joined. Were they all collaborative? My guess is no, many were teams on paper and groups of individuals in real life. I was on many of those teams in the corporate world. The CEO would announce a team and charge it with a goal. We would assemble and find that each team member focused on his or her department’s goals instead of the CEO’s goal. That is, his or her compensation targets. Team members were reluctant to devote time to something that lacked a direct connection between action and reward. Turning those teams into performing units was a challenge.

By “collaborative team” I mean a team that will pull on all the oars to move the boat. This is a team aligned behind the goal. Each member will do his or her part to get from start to finish. These are fun teams.

Lawyers are goal oriented, so we exceed expectations as members of teams that have specific goals. We can handle “close the deal,” “win the case,” and “finance the new venture.” We spend a long education career focused on goals—tests, grades, entrance exams, bar exams. Professional goals, like those I named, and career goals, like “make partner,” are part of the gig.

Our success level drops on the collaboration part. We want innovation, we (okay, some of “we”) want change, and we want clients to love us. But, we find it difficult to share with others. This is collaboration.

We can go back to Musk and going to Mars. To accomplish this goal, Musk needs a collaborative team. Your first thought went to building the rocket—he needs a big, powerful, reusable rocket. That sounds like what he does with SpaceX, build reusable rockets for space travel. He needs lots of engineers. Engineers working with engineers is like lawyers working with lawyers. We need broader collaboration.

The engineering team gets the crew to Mars. Remember, it is a 260 day journey. The crew will stay on Mars for three to four months. As we all know, planets travel on elliptical orbits. The nine month journey got the crew to Mars as Mars arrived at the point in its orbit closest to Earth. The crew will want the same advantage coming home. The crew will spend three to four months on Mars doing things as they wait for the right moment to get back to Earth in the shortest period. All in, the crew’s trip will last 22 to 23 months.

This trip requires a powerful rocket. The crew needs plans for food, medical emergencies, clothing, housing, social issues, communication, and travel on Mars. Musk has help to figure all of this out. He has a collaborative team composed of experts from many disciplines (I’m guessing he skipped lawyers). They must collaborate or they will fail and failure means people may die.

Teams Serve Clients’ Interests

Practicing law is serious, but most of the time a lawyer’s failure means something other than a client’s death. It can, however, mean the client suffers some serious consequences. Collaboration would help lawyers do better at tackling client problems. Client’s have problems with legal dimensions. The best solution may involve a small law component and big dollops of other things. Without a collaborative team, delivering that must-part solution is difficult.

Innovation suffers if everyone on the team wears the same “I am a ________” badge. Collaborative teams built with people from many disciplines perform better. Entrepreneurs know this and have focused their time and sponsor’s money building collaborative tools. The network is the thing.

Facebook is a collaborative tool. So is Snapchat, Slack, and even Word isa collaborative tool (it offers “real-time co-authoring to see everyone’s changes as they happen”). I have seen products at various stages of development that try to break the “toss it over the wall” barrier. Lawyer drafts document, tosses it over the wall to opposing counsel. Opposing counsel edits document, tosses it over the wall back to the first lawyer. These products allow both lawyers to be in the document at the same time working through changes.

Outside the legal industry, collaboration takes the form of sharing research, writing, and knowledge. The scholars and practitioners use sharing to advance the domain. New tools have come out to make the collaboration process easier and interesting.

I am not endorsing any of these tools. All sit outside the legal industry. Allencourage collaboration outside a single domain. Scholars in natural science prefer some, scholars in social sciences favor others. Some will give you ideas to help collaborate and advance the legal industry. The tools are free (some have premium features). Think of what these tools could be if lawyers became part of the broader knowledge universe, rather than isolating their knowledge.

Authorea is a collaborate writing and publishing tool. But, it goes further than static text. You can combine many types of information into one Authorea document. Text is the basic starting point. To that, you can add interactive figures, data that readers can modify on the fly, and equations. You can use dynamically modified charts. You can use simple writing languages (Markdown) or go to sophisticated typesetting languages (LaTeX). You can improve the document so readers engage with what is on the screen.

Lawyers think they produce text. But, lawyers need to tell stories using all forms of media. An article discussing self-represented litigants becomes interesting with graphs. Interest increases as the reader applies filters to the graphs giving dynamic control over the content. Including video in an article discussing body cameras makes a lasting impression.

Authorea is in Beta as the developers bring on features. It and other software in this category offer a “one-click” submission feature. It partners with journals. Authors can submit their article, formatted for a specific journal, without spending time re-formatting for each submission. Authorea authors can export their articles in various formats (including Word), and preprint articles on Authorea’s site (complete with DOI, a tool I discuss in a few paragraphs).

Overleaf is another collaborative authoring tool. It uses LaTeX, a typesetting language I mentioned in the Authorea discussion. A mathematician developed LaTeX. He included formulas in his articles, But, available software lacked a way to type formulas. LaTeX has expanded so that today it is a full-fledged typesetting software. But, it has been something of a geek’s paradise. To use LaTeX, you had to love two things: 1) playing with code, and 2) bumps in the road (known as glitches).

Overleaf (and Authorea, and others) bring LaTeX to everyone. They make it easier to use LaTeX without having to know LaTeX. Create a paper on Overleaf with your co-author using a template, and you have a publication ready document. You can include graphs, images, video, and formulas. It includes version and change tracking (as does Authorea). You can use it to create presentations, brochures, and other documents.

Ken Grady is a popular name. One Ken Grady does research in biology. One Ken Grady is a chief information officer and one is a teacher. I have seen links on Google to others, though at least a few seem to have had experiences with law enforcement on the other side of the bar. How is a poor software package going to tell us apart? Enter ORCID.

“ORCID provides a persistent digital identifier that distinguishes you from every other researcher and, through integration in key research workflows such as manuscript and grant submission, supports automated linkages between you and your professional activities ensuring that your work is recognized.” It is like a universal bar license number system. ORCID gives a computer a way to distinguish me from other Ken Gradys.

ORCID is a transparency tool. If each litigator used an ORCID, we could run a search to find all the cases involving that litigator. We could review briefs filed to measure quality. We could track what each lawyer wrote through articles, blog posts, briefs, and so on. For many lawyers, the thought of accountability could be scary. For others, it would be an advantage. For clients, it would mean transparency.

DOI stands for “digital object identifier.” It is the ORCID for digital material—a unique identifier for digital matter. The International DOI Foundation is the governance and management body for the DOI® System. The DOI System meets the ISO standard 26324:2012 (Digital object identifier system). What does all this mean?

Lawyers use an outdated system for referring to materials built on hard copy publications. Instead, lawyers could use a persistent, standardized, and open identifier system. This system works in the electronic world. Citing to a case as “XXX F.3d XXX” tells us something if we use books published by West Publishing Company, part of Thomson Reuters. Today, most law libraries and law firms have disposed of the books. They use online tools, such as Westlaw, LexisNexis, or Fastcase. We cite books no one has, instead of DOIs that take us to the case. Law reviews stick to hard publication cites for the journals rather than using DOIs. Switching to DOIs would encourage broader readership and remove another obscure citation format.

The Social Science Research Network advertises that it provides “725,614 research papers from 334,913 researchers across 30 disciplines.” It includes economics, law, humanities, accounting, and cognitive science. You can find papers from authors seeking feedback. You can find papers accepted for publication. You can find conference papers and research papers the authors will not submit for publishing. This is an information dissemination network.

SSRN has had some controversy in recent times. Elsevier, owner of the scientific paper publishing site Mendeley, acquired SSRN in 2016.That changed SSRN from a non-profit entity into a part of a for-profit publisher. Many have expressed concerned that SSRN’s open source content may change to pay-for-access content. SSRN has changed, but it remains open source.

One of the claimed benefits of the move is the association with Mendeley. The argument is that the connection between the areas covered by SSRN will become integrated with the areas covered by Mendeley. We will see what happens, but it is a sign that greater collaboration among disciplines fits with the mood of the times.

SocArXiv is new, having started in July 2016. The founders announced it following Elsevier’s acquisition of SSRN. It is open source and focuses on social sciences. For many, it stepped into the space SSRN had occupied as the founders (and others) feared Elsevier’s impact on open source publishing.

SocArXiv focuses on preprints. It uses the preprint definition from the Open Research Glossary, “a manuscript draft that has not yet been subject to formal peer review, distributed to received early feedback on research from peers.” The legal industry has avoided peer review. To lawyers, preprints include “papers that have been accepted for publication in a scholarly journal, but not yet been ‘printed’ (on paper or electronically).”

Embrace Collaborative Teams

Lawyers live in a world of confidentiality and privilege. That makes it easy for us to confuse sharing with professional responsibility. They write papers, articles, and blog posts every day. They file briefs in open court. They do public presentations.

Lawyers need to share with other lawyers, with clients, and with those outside the legal industry. Lawyers should collaborate on what they do, to get the benefit of many ideas. They need to create and leverage teams, to get something greater than what each can create alone. Lawyers must move past the gladiatorial battle cry of “my ideas will crush yours” to “how can our clients benefit from what we do.”

Conclusion

This is an essay on these details of publishing papers, presentations, and other materials. I avoided telling you how reading it would satisfy the “will this help me in the next 30 minutes.” If I frustrated you, I am sorry. Lawyers must work on their need for immediate gratification.

If you are outside the mix of developments in your area that interest your clients, you have lost relevance. Simple computer automation can take a big load off your back. Use the time to understand what your clients need and find value. That value lies in the world of material published every day, and to which you contribute, that is hard for all of us to access.

In my class on Entrepreneurial Lawyering, we discuss the idea of an “unfair advantage.” This is an advantage your competitors will find difficult to match. Ubers app is a good example. Taxi drivers may have a local app, but will find it hard to have one app you can use worldwide to hail and pay for a taxi. Being a lawyer educated in the developing ideas relevant to your client in your domain would—strangely—give you an unfair advantage. To succeed in that world you need to collaborate.

Remember those crime shows on television? You know the ones I mean. The bad guys committed the crime, the police investigated the crime, the forensics lab solved tricky scientific problems, and the DAsprosecuted the crime, and the jury delivered a verdict. Everything was tied a neat bow. In one hour, injustice and justice combined.

Scientists got smarter and tests more sophisticated. DNA testing became commonplace. At first it took months to get the results, then day, hours, and now I am sure there is a show where they swipe the suspect’s hair on their iPhone and get the results before the police can raise the yellow crime scene tape.

DNA testing is the rage. Genealogy companies offer it as a service, you can get tested for health problems, and at least one company offers DNA testing as an employee benefit. I love the genealogy company commercials where the actor says he is part this, part that, and part the other thing. Confirmation that we all have a lot of everybody else in us.

We have the same DNA mixing going on in the legal industry right now. Four hot methodologies share common ancestors: lean thinking, agile (scrum) project management, design thinking, and lean startup. If we look closely, we can see the family resemblance.

Think Lean

Lean thinking sits closest to the roots of this family tree. Bits and pieces of what we call lean thinking started coming together in the 1850s, though of course nothing is new. We can find antecedents to many lean ideas if we look at how people solved nagging problems. But, most people point to the 1970s as the period when many ideas that became known as the Toyota Production System jelled. In 1996, Womack, Jones, and Roos published Lean Thinking. For most, this book was the tipping point. Lean thinking started growing in the United States. It now sits in all industries and as the most popular form of process improvement.

Manage the Project

Project management comes in two basic flavors: heavyweight and lightweight. Heavyweight is the traditional, waterfall approach to project management. Most people touch waterfall project management at some point in their careers. It requires significant planning, proceeds methodically from stage to stage, and works best if the situation calls for tight and sequential process control. Want to build a 100-story skyscraper? Waterfall project management will do the job. Lawyers have found waterfall project management a bit restrictive and not well-suited to a rapidly changing environment.

Lightweight is “agile” project management and includes several of flexible approaches. Scrum is the legal industry’s favorite. Scrum requires small amounts of planning, adapts quickly to changing circumstances, and focuses on doing only what is needed when it is needed. Lightweight project management was born in the software industry and has replaced heavyweight for many projects.

Think Design

Design thinking is gaining traction in the legal industry. It also has an interesting lineage. The version we see most often dates back to the 1960s (though it also has roots dating farther back). Brothers Tom and David Kelley developed it as part of their IDEO design business. As the wheel diagram shows, it has grown as the theories behind design have moved from user participation to users being an integral part of the design process. Design thinkers take a fresh approach to creating solutions, focus on the customer, and use rapid ideation and prototyping to avoid the slow and wasteful linear process to design.

From “A Brief History of Design Thinking: How Design Thinking Came to ‘Be’ ’” by Dr.Stefanie Di Russo. https://ithinkidesign.wordpress.com/2012/06/08/a-brief-history-of-design-thinking-how-design-thinking-came-to-be/

Startup Lean

Eric Ries brought us The Lean Startup and the idea that new ventures should adopt principles that helped old manufacturers. Most lawyers forget that their practices are startups. Client demands evolve, law changes, competition introduces new ideas. A lawyer, regardless of where she practices, should think as an entrepreneur thinks. Avoid waste, prototype and pivot quickly, focus on what your client needs not what you want to deliver, build only what is needed, and stay nimble.

Sharing the DNA

All four methodologies focus on delivering what the customer needs when the customer needs it. This focus ties into a broader theme in business right now, typified by the one-to-one marketing philosophy. Rather than trying to sell a product or service that compromises in many ways to meet the needs of the average consumer, businesses try to sell products and services tailored to the desires of each consumer. The closer the product fits the customer’s needs, the less waste involved.

The following chart, which comes from a paper Roland M. Mueller and Katja Thoring prepared for the 2010 Leading Innovation Through Design Conference, briefly touches on some of the similarities and differences of design thinking and lean startups. Their paper, titled “Design Thinking vs. Lean Startup: A Comparison of Two User Driven Innovation Strategies,” gives you a flavor of how two of the four methodologies bear a family resemblance.

I can buy shoes and apparel that I’ve customized with colors and features. I can use websites to build my car or my furniture, selecting the specific accessories I want. Retailers are famous for marketing one-to-one, sometimes using a bit too much information to guess what the customer needs (the retailer offering discounts on baby items to the teen who hadn’t told her parents she was pregnant).

The four methodologies share a focus on speedy development and revision. In the past, businesses focused on planning. They built business models, planned for contingencies, and worked through as many angles as possible before they made a move. In the present, they try, change, try, change, and repeat. They get something out there, test it, and change direction as fast as they learn from customers. The lean-based methodologies I have named make that rapid approach possible.

We Know What We Don’t Know

The practice of law—the methods and techniques of delivering legal services—has received almost no attention from scholars. Why bother spending time on something everyone does the same way and no one will change? For decades, this omission distorted our understanding of law. How law is delivered impacts the substance of law as much as what law is delivered. Take a simple example. Contracts of adhesion. We sign them every day—every time we click through something that says “by clicking here you acknowledge our terms and conditions.” That method of legal services delivery impacts your rights (embedded somewhere in those terms and conditions) more than the theories of bespoke negotiated contracts.

The odd legal industry culture has received some attention, especially in recent years, as its idiosyncrasies have impeded progress in solving society’s problems (e.g., poor access to civil justice, quality issues, affordability issues). At this time, that culture—resistance to change, failure to adopt technology, lack of affordable legal services—has stirred resentment and anger among citizens. If someone cannot protect their legal rights and loses their job or their house, someone else is to blame. Lawyers play a part in those dramas. Ineffective legal services delivery has more importance than the substance of the law involved.

Four “Leans” and the Law

For the past five years, as interest in project management, process improvement, design thinking, and lean startups, has accelerated, we have seen a kaleidoscope of implementations. Few have a good grasp of how to combine these methodologies into a coherent program for delivering legal services, or choose which ones to emphasize and which to de-emphasize. Think of four musicians each learning a different instrument. One challenge is to learn the instrument, but the second challenge is to learn how to play as a band. We have inexperienced musicians who skip band practice.

This confusion has negative affects on law firms, law departments, and clients. Rather than providing coherent ways to deliver affordable legal services, based on concepts such as efficiency and increasing quality, they are seen as an extra burden to practicing law. Law firms and law departments have not learned how to make these methodologies work together. They have lacked the assistance of scholars to light the path. Some consultants have helped, but most focus on only one or two of the disciplines. A few of us work on researching, synthesizing, and explaining these disciplines combine in law, but it is—admittedly—a slow process.

This leaves the industry with a gap. Many lawyers acknowledge the need for change, but find it difficult to do so without significant help. Other lawyers need convincing. They want proof that if they change, they will succeed. Most stay on the fence. Clients, however, are not on the fence. They want change.

Getting the Band Together

How can we proceed? In the context of the four methodologies I have discussed, I will make some suggestions:

1. Collaborate and Share.Break down the historical barriers between the practicing bar and academia. Scholars need access to practicing lawyers, data, and clients. With this access, they can apply many tools and techniques to identify challenges and point to solutions. Scholars have strong interest in this work, and law firms, law departments, and clients benefit.

2. Focus and Share. A big challenge in evolving legal services is deciding where to focus your energy. Every month someone has a new thing to draw your attention. Metrics. Technology. Process. Project. Doing the basics of a law practice seems to take a full day. Add these new things to the old add-ons (e.g., marketing) and focus drifts. Nevertheless, you must focus. Go T-shaped. Understand your domain in depth, but become familiar with the other areas. If you spread what you need to know among many, the burden on each of you drops.

3. Bend and Share. Inflexibility. Lawyers do what they do because that is what their mentors did, and their mentors, and so on. Decades of doing the same thing worked well for most lawyers, until the late 1980s. The two-humped camel of the legal industry emerged. Large law firm lawyers to the right, everyone else to the left, and a valley between them. As real competition emerges in the legal industry, lawyers must learn to flex, to bend, to adapt. Sharing knowledge and techniques among themselves and with others will be key to coming through this transition and succeeding on the other side.

The Stakes Are Higher Than Large Corporation Legal Fees

Although the legal industry has existed for centuries, it is an immature industry. The business model that brought many lawyers fortunes was fixed a century past. Now, it has a stranglehold on us inhibiting change. The four lean methodologies I described are opening new business models, but we have a long journey ahead. We need to progress faster if we want to keep the profession from slipping deep into irrelevance. That is a worthy reason for change. The compelling reason lies outside the industry. A healthy, functioning, and responsive “legal infrastructure” (as Gillian Hadfield has named it) is essential to our society. Letting that legal infrastructure decay, the way our general infrastructure has decayed, brings a massive threat to all of us.

Four years ago, a person parking in the company parking lot dinged the door on my newtruck. He or she opened their car door too wide. At the time, I thought, “wow, I could file a lawsuit for damages and become the new profit center for my family.” Okay. I thought something else (which I will refrain from saying as this is a family blog). But, had I thought the “family profit center” idea it would have reflected a popular idea circulating in the legal industry. Consultants and some general counsel advocated turning law departments into profit centers. I thought this nonsense had died. But, I saw a new white paper on the topic so I guess we need to work harder to kill this bad idea.

Alchemy and the Law Department Profit Center

The white paper, whose author I will refrain from identifying, focused on some tired oldies with the profit center pitch. We can run through them.

1. Pursuing wrongdoers. Someone harms the company. The law department pursues the perpetrator. The recovery effort works. The company wins damages or secures a settlement payment. The recovery exceeds the law department’s costs. The net amount is profit to the company. The law department is a profit center.

Um, no. Ignore the risk (claims against your company), the disruption (document gathering, depositions), and the general distraction. The idea suggests: let the harm happen, wait as long as you can to let damages build, then recover. That strategy would optimize the company’s and law department’s profits. Abusing the legal system is different than running a business. Recoveries compensate for harm (no harm, no recovery, no profit). Sometimes they remind the wrongdoer that harming others does not pay. Better strategy: identify risks and prevent them lowering the company’s overall cost.

Um, no. Strange as this may seem, doing your job does not convert you from a cost center to a profit center. Everyone in a company, even the lawyers, should work to reduce costs. One could construct a fiduciary argument that lawyers and other employees owe shareholders a duty to reduce costs. Profits increase as you lower costs. But, a lower cost law department remains a cost center. Better strategy: incorporate waste reduction as part of your organization’s ethos and focus on productivity.

3. Helping procurement do better. This idea builds off the waste reduction idea. Lawyers work with the procurement group. Lawyers can help procurement improve at what it does. As procurement does better, costs drop, profits increase and, ta da again, the law department becomes a profit center.

Um, no. This is a wacky notion. Lawyers doing their jobs turns the law department into a profit center? Part of the job of an in-house lawyer is to help other departments do their jobs, even procurement (unclear why they were singled out). Yes, procurement helps the company with major purchases, but every department buys things so the law department should help all departments improve their operations. Better strategy: look for ways to reduce friction through legal process improvement.

4. Turning IP into gold. This is an oldie, but a favorite. Every company has IP. Others must want your IP. Maintain an active licensing program run by the law department and the law department—you guessed it, ta da—turns into a profit center.

Um, no. Other departments took risks, invested in people, equipment, and materials leading to inventions. If what those departments created has value through licensing, they should benefit (minus the costs of the licensing program). The law department does not become a profit center by recovering those investments. And, what does it do as the pipeline runs dry? Better strategy: partner with all departments on ways to maximize asset efficiency.

Maybe those were bad ideas. Could a law department become a profit center? Sure. If the law department invests in people, equipment, or materials that lead to ideas it can license, it can become a profit center. Imagine a law department that develops a contract management program. It licenses the program to other companies. One could question whether that is the role of the law department and whether those investments should go to other departments. But, those are policy questions. The law department made the investment and if it recovers value in excess of the investment, the law department earned the profit.

Aim to be a Competitive Advantage

Where should a law department focus its time? A law department should focus on becoming a competitive advantage for its parent corporation. IT departments, human resources departments, finance departments, and other service departments should do the same thing.

What does being a “competitive advantage” mean? Start with basic law department functions. A law department should aim to reduce its spending per lawsuit dropping below competitive law departments. They should keep risk at an equivalent level or lower it. If company A’s cost per slip-and-fall lawsuit is $50,000 and it is $40,000 for company B, company A’s lawsuit costs put the company at a competitive disadvantage. It should bring its cost below $40,000. The cost includes expenses, settlements, and disruption costs (e.g., time of employees taken away from work). A law department wants the cost of its functions at or below the industry average. Even better, they should aim for the bottom quartile of the industry (on a risk-neutral evaluation). Getting to that competitive advantage by increasing risk is unacceptable.

With costs under control, the law department can focus on real drivers of competitive advantage. Doing things the same way and just as good (or bad) as everyone else does not provide a competitive advantage. If the industry average time to sign a new distributor agreement is 90 days, streamline processes so that your company can get them signed in 60 days. The 30 day saving translates into revenue, a competitive advantage. Do the terms and conditions of your contracts create greater friction than terms and conditions in competitor contracts? Simplify the terms and reduce friction. Make it easier to buy from your company.

Law departments that form relational structures with their legal services providers have advantages over departments pursuing transactional relationships. A transactional relationship is the structure we see today. Hire a firm for a matter and move on. Use RFPs to excess, bargain for the lowest price, and forego enduring relationships. Law firms have no incentive to invest in innovation for the client. The law firm will not spend resources finding ways to increase the client’s competitive advantage.

Relational structure clients look for enduring relationships. In a relational structure, the client and the law firm re-work processes to cross organizational borders. By integrating processes across borders, the client and firm achieve greater process improvement than either can achieve on its own. They work as one rather than as distinct entities. Both have incentives to invest in the future of the other. The law firm looks for ways to give the in-house law department that competitive advantage. The advantage could come from new ways of doing things, new things to do, and even new business opportunities for the company (such as new financial products).

The client benefits from innovation and the law department demonstrates greater value. The law department may drive new business, but at a minimum it reduces its drag on the existing business. No one tries to turn the law department into something other than a cost center. But, the law department focuses on becoming a competitive advantage.

Be Comfortable in Your Skin

The “law center as profit center” idea came out of law departments looking for ways to show they add value. They made a mistake; they thought value equalled profit. Get comfortable living in the “cost center” skin. But be wise. Spend money to avoid lawsuits rather than prosecute or defend lawsuits. Preventing lawsuits reduces cost and friction.

I have argued for the competitive advantage view without discussing certain challenges of becoming a profit center. But, I should mention them. First, profit centers approach challenges from a different viewpoint than risk management centers. Corporations need checks and balances. As a law department moves from risk management to profit, the incentives change. Is it in the best interest of the shareholders for law to make that move? Who watches the henhouse?

Second, as a profit center, the law department moves from service provider to competitor within the organization. It must demonstrate an equal or higher return on investment in the law department than other departments. As a service department, it should consider return on investment, but not as part of that competition. The ROI question is whether it uses the resources given it efficiently. Focusing on reducing antitrust risk may have a higher ROI than focusing on reducing contract risk. That information helps as the law department considers ways to spend its resources.

Law departments can and should demonstrate value to their parent corporations. Many metrics will do that. Showing the law department’s competitive advantage is consistent with risk management, cost management, and adding value. Leave the profit center concept to your clients.

About SeyfarthLean Consulting LLC

SeyfarthLean Consulting LLC’s SeytLines is a resource for lawyers, consultants, vendors, academics and journalists seeking discussion and updates on leadership, change, efficiency, strategy and innovation in the legal industry. Our goals are, first, to stimulate discussion about where the legal industry is and could be going, and second, to look at evolving practice trends in the context of global legal, regulatory and compliance environments. The bloggers draw upon their own experiences working with organizations as they develop new ways to practice law. As with all things we do, our focus starts with what clients’ value.